Hobby expansion adds 10,000 jobs, Southwest says

By Chris Moran

Updated 12:18 am, Wednesday, April 4, 2012

Opening Hobby Airport to commercial international flights will create 10,000 jobs, bring 1.6 million more air travelers through Houston annually and inject an additional $1.6 billion a year into the local economy, according to a Southwest Airlines executive who has seen city-commissioned studies on the matter.

"We're asking for an opportunity to invest $100 million in a new building in your city to provide more passengers, 1.6 million a year, a huge economic gain for the city," Ron Ricks, executive vice president and chief legal and regulatory officer for Southwest Airlines, told the Houston Chronicle editorial board Tuesday.

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City Council is scheduled next month to consider granting Southwest permission to build a customs facility at Hobby so the low-cost carrier can fly to Cancun, Mexico, the Caribbean and other Latin American destinations as far away as Caracas, Venezuela.

United Airlines, which flies out of Bush Intercontinental Airport, opposes the plan, arguing that it could siphon off international travelers, reducing the mass of connecting traffic on which Bush-based carriers depend to sustain and expand routes from Houston. United also argues that a second international airport will divert Customs officers, creating longer wait times at Bush.

"Southwest is trying to justify the city abandoning the single-international-airport policy that made IAH one of the world's premier gateways. The purported economic benefits are taken directly from the city's draft economic impact study, which we have advised the city is fundamentally flawed," said United spokeswoman Mary Clark in a statement. "Our own conclusions based on realistic assumptions and data show that dividing the city's international air service market will cause dramatic, measurable harm to IAH and Houston's economy."

Customs delays

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Other voices speak on Southwest bid

Unions and community activists are weighing in on Southwest Airlines' proposal to operate international flights from Hobby Airport.

Texas Organizing Project, a grass-roots group that advocates for low- and moderate-income residents, called on city leaders to give the community a voice as they decide whether to approve the plan, which United Airlines opposes.

"The people that have Hobby in their backyards and the people that live and work around Hobby deserve a seat at the table," Durrel Douglas, the group's communications coordinator, said at a news conference Tuesday in front of City Hall. "This shouldn't be a fight between corporations and corporations, nor should it be a fight between neighborhood and neighborhood, but it should be a fight for what's best for the city of Houston."

Southwest and United pilots unions have expressed support for their respective airlines.

Capt. Jay Pierce, chairman of the chapter of Airline Pilots Association representing pilots who fly with Continental Airlines, which merged with United, said Southwest's proposal to fly to Latin America and the Caribbean from Hobby would hurt Bush Intercontinental Airport. In a statement, he said the pilots are concerned that the city will make a hasty decision based on "incomplete information currently being provided."

Neal Hanks, spokesman for the Southwest Airlines' Pilots Association, said those pilots favor the company's efforts as they are "generally in favor of any type of expansion or growth."

- Kiah Collier

Houston Airport System Director Mario Diaz is expected to recommend whether Hobby should go global in a report to Mayor Annise Parker on Monday. The recommendation and the city-commissioned studies on the economic impact of the expansion will be made public that same day, the mayor announced in a memo on Tuesday.

Southwest CEO Gary Kelly said repeatedly at the editorial board meeting that Southwest is not asking for any city investment in the terminal expansion and Customs facility addition to Hobby. The $100 million cost of the project is to be covered by debt backed by Southwest and paid off through ticket surcharges.

Clark said Customs waits at IAH are among the worst in the nation. "If Houston can secure additional agents, they should be deployed to address the chronic understaffing IAH experiences every day," Clark said.

But Ricks asked, "Is Houston going to let 20 Customs agents stand in the way of a $1.6 billion-a-year economic impact? If we can't solve finding 20 Customs agents in this economy, then Houston, we do have a problem." Ricks said staffing is covered by a $17.50-per-international passenger fee.

Reduced fares

Kelly said he believes Southwest's entry into the Houston market will drive down prices and increase passengers at both airports.

"If you make the air fares affordable, the people will fly - a gigantic increase. We're arguing to you the pie is going to increase," Kelly said.

Kelly stopped short of saying how much fares would come down. The volatility of fuel prices makes it difficult to forecast what Southwest's fares would be, he said, but added Southwest has enjoyed 39 straight years of profitability in part through offering cheaper fares than its competitors.

"We're talking about bringing you more flights, more competition, low fares. It'll create more jobs, over 10,000 jobs is what is predicted," Kelly said. "What you'll see will be a significant reduction in fares" if Southwest flies those routes from Houston, Kelly said.